John invested $12,000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is $4,000. If the shares were sold today and the proceeds invested in another investment, they would likely earn 5% per annum. Which of the following terms and values is correct?

A. $125,000 is the opportunity cost of selling the shares todayB. $12,000 is a sunk costC. $250,000 is the opportunity costD. $2000 is the opportunity costE. None of the above

Question

Business

Kamren

18 September, 10:55

John invested $12,000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is $4,000. If the shares were sold today and the proceeds invested in another investment, they would likely earn 5% per annum. Which of the following terms and values is correct?

A. $125,000 is the opportunity cost of selling the shares todayB. $12,000 is a sunk costC. $250,000 is the opportunity costD. $2000 is the opportunity costE. None of the above

+5

Answers (2)

Know the Answer?

Kevin · Answer 1

The answer is B

Bridger Benitez · Answer 2

B. $12,000 is a sunk cost

Explanation:

By considering the given information, the cost that is correct is a sunk cost for $12,000

The sunk cost is the cost already incurred and will not be retrieved in the future. Plus, it's also termed a past cost.

It is a useless cost and it can be avoided also.

It is that cost that is not considered at the time of decisions making.

So, option B is correct